Jul 29, 2024 · 52m · capital-allocators
Jeff Assaf - Protecting Clients and Assets at ICG (EP.398)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Jeff Assaf, founder and Chief Investment Officer of ICG Advisors, exploring his career evolution, external manager selection criteria, the mathematical power of portfolio volatility reduction, and ICG's capacity-constrained wealth advisory model.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 19.4% of the talking time here. How this is scored →
Ted as informed peer 3.6 Guest teaching 4.4 Guest disagreement 1.9 Ted pushing back 0.4
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 36:57 Critique of private equity marks
Jeff forcefully challenges broad private equity valuation realism by quoting a hedge fund manager who labelled PE sponsors delusional for trusting their marks over market signals.
Hardest push from Ted ▶ 35:13 Testing the manager retention logicTed presses Jeff on whether waiting out an underperforming manager for a rebound merely delays an inevitable exit once prices recover.
Biggest teaching moment ▶ 22:10 Mathematical drag of volatility on cash flowsJeff demonstrates the quantitative difference in terminal wealth when volatility is cut in half across a real client portfolio undergoing continuous capital injections and redemptions.
Ted holds their own ▶ 38:45 Framing venture risk in low-volatility mandatesTed demonstrates allocator expertise by pinpointing the tension between ICG's low-volatility portfolio objectives and the inherent binary risk profile of venture capital.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Career Genesis: From Wall Street Brokerage to ICG Advisors | 3 | 2 | 1 | 0 | Ted prompts Jeff to recount his career path from his initial banking training program to Oppenheimer, Bear Stearns, and eventually spinning out ICG Advisors in 2008. The tone is highly collaborative and storytelling-focused, with minimal tension. | |
| Evaluating Manager Edge, Alpha Generation, and Operational Diligence | 4 | 5 | 2 | 1 | Jeff gently reframes Ted's premise about seeking smart managers, explaining that intelligence is table stakes on Wall Street and true alpha requires structural edge, volatility adjustment, and rigorous operational diligence. | |
| Structuring Client Objectives and Math of Volatility Reduction | 4 | 6 | 1 | 0 | Jeff explains the mathematical significance of volatility reduction in compounding when ongoing client cash inflows and outflows are factored in, detailing a specific historical client simulation. | |
| Sponsor Message: Ridgeline Modern Investment Management Tech | 4 | 5 | 2 | 1 | After an ad read, Jeff details why ICG avoided long-only investment grade bonds for over a decade due to duration risk and critiques high-net-worth aggregator platforms that dilute private equity returns with excess layers of fees. | |
| Evaluating Underperforming Managers and Private Equity Valuations | 4 | 5 | 3 | 1 | Jeff details how ICG engages with underperforming hedge fund managers and critiques private equity mark-to-market practices, citing a fellow hedge fund manager who characterized PE valuations as delusional. | |
| Custom Portfolio Design, Manager Relationships, and Concierge Service | 3 | 4 | 2 | 0 | Jeff outlines their high-touch concierge model, demanding transparency and direct PM access from managers, while rejecting managers who hide behind secrecy. | |
| Firm Capacity Limits and M&A Industry Consolidation | 3 | 4 | 2 | 0 | Jeff candidly discusses RIA consolidation trends, explaining that most acquisition proposals offer clear synergies for the buyers but would add no meaningful value to ICG's existing bespoke client service model. |
Statements from this episode (14)
Assaf: ICG left JPMorgan post-Bear merger over funds placement conflicts
“JPMorgan wanted us to stay. They were great too. But we figured out that because they have this massive funds placement business, that business had conflicts with ICG. And when we figured it out, I went to the compliance people and I called our lawyers and sai…”
Assaf: ICG focuses diligence on smaller investment managers to find edge
“They tend to be smaller than larger. They're not managing Hundreds of billions of dollars generally. So we spend way more of our time looking at smaller firms than we do at larger firms.”
Assaf: ICG Advisors manages $7B to $8B across 80 clients
“Eighty-ish clients.
Most of them are taxpayers.
A dozen are small and mid-sized institutions.
Museum, a hospital,
School, things like that, but mostly families or people.
I don't know what our AUM is, but it's probably between seven and eight billion, or appro…”
Assaf: Lower volatility produces higher dollar wealth when cash flows occur
“If there's cash flows along the way, I'm going to have more dollars than you will if I compounded with half the vol.”
Assaf: ICG mostly avoided investment-grade fixed income for 10-15 years
“Well, we haven't had long only investment grade fixed income in client portfolios for probably more than the last 10 years, maybe the last 10 or 15 years, and if we had it was really short duration, almost extended duration cash type stuff, but no traditional …”
Assaf: ICG prepares to reintroduce fixed income after a decade-long absence
“We're just now starting to really consider beginning to add some of that asset class back into portfolios and are pretty close to done with the work we're doing to identify the managers we'll use to put that in place for some of our clients where it's an appro…”
Assaf: Retail private equity aggregators will likely disappoint investors due to fees
“If it gets there through aggregating vehicles, there are shops that are in the business of making private equity and other alternatives accessible to a universe of clients that are smaller than ours. A good chunk of the returns that our clients will get from t…”
Assaf: S&P 500 passive funds will likely lag good active managers over 5-10 years
“It probably won't do as well, relatively speaking, over the next five to 10 years as it did over the last five to 10 years relative to good active managers. We believe that. We'll see.”
Assaf: Private market excess returns will likely diminish with increased competition
“And so, as the private market world becomes more and more accepted, we'll probably start to see the excess returns diminish.”
Assaf: Missing a manager's rebound hurts more than enduring mediocre returns
“And the pain, from our perspective, of them being right and us being gone is much more than the pain of six more months of it was mediocre.”
Assaf: ICG refuses to re-up with private equity managers holding questionable marks
“Even if the results are good, if we're not comfortable with the way they mark their book, we just don't believe it, they're just basically faking it till they make it, and they do make it, so the results are good, there's a much less likely chance we're gonna …”
Assaf: ICG prefers sector-specialist private equity managers over generalists
“Our private equity managers tend to be more sector focused specialists like healthcare guys, or finance markets, or biotechnology that gets really complex and really requires sector expertise, not a jack of all trades.”